The Federal Communications Commission (“FCC”) has released a Notice of Inquiry requesting comment on whether broadband is being deployed to all Americans in a reasonable and timely fashion. [1] The FCC will use the information it receives to produce the 13th Section 706 Report (Broadband Progress Report). Comments are due on or before September 7, 2017. Reply comments are due September 22, 2017.

Pursuant to Section 706(b) of the Telecommunications Act of 1996, the FCC must annually inquire whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. [2] In the statute, the term “advanced telecommunications capability” is defined, without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology. If the FCC determines that broadband is not being deployed in a reasonable and timely fashion, Section 706(b) requires the FCC to take immediate action to accelerate broadband deployment by removing barriers to infrastructure investment and promoting competition. There have been years in which the FCC has not issued a broadband progress report, including last year when the FCC released an inquiry, but did not issue a report.

In the past five reports, the FCC concluded that U.S. broadband deployment is not reasonable and timely. The next report, however, will be the FCC’s first broadband progress report issued under the Chairman Pai regime. When Chairman Pai was an FCC Commissioner, he dissented from the negative conclusions in two of the FCC’s past reports – the 8th Report and the 2015 Report. He concurred, however, with the negative finding in the 2016 Report based on his view that “[r]ural America is being left behind.” Then Commissioner Pai’s concurring statement focused on a failed agenda that distributed billions of dollars of support for broadband deployment yet was unable to close the digital divide between rural and urban America. Based on Chairman Pai’s past statements and the proposals in the Notice of Inquiry, the FCC will likely overhaul the entire Section 706 process, and move to a positive finding in the 13th report.

In the Notice of Inquiry, the FCC has signaled it will chart a new course by starting “afresh, with updated data and questions focused on the current progress of deployment of advanced telecommunications capability.” The Notice of Inquiry departs from previous assessments by, among other things, proposing to find the availability of advanced telecommunications capability requires access to either fixed or mobile services; proposing to set a 10/1 Mbps speed benchmark for mobile broadband services; and measuring annual broadband deployment by comparing deployment to census blocks in a present year to deployment in previous years. Below is a high-level summary of the FCC’s Notice of Inquiry.

Broadband Availability Defined as Access to Either Fixed or Mobile – Not Both

In the Notice of Inquiry, the FCC has indicated it is considering defining “availability of advanced telecommunications capability” as access to either fixed or mobile services. This is a significant departure from previous broadband progress reports in which the FCC has concluded that the availability of advanced telecommunications capability requires access to both fixed and mobile services.

Fixed Broadband: 25/3 Mbps Speed Benchmark & Other Metrics

As it has in past reports, the FCC proposes to use a specific speed benchmark to evaluate fixed broadband deployment. The FCC asks whether it should maintain the current speed benchmark of 25 Mbps download and 3 Mbps upload. In addition to speed, the FCC also requests comment on whether it should incorporate other metrics such as latency, consistency of service, and monthly usage constraints.

Mobile Broadband: 10/1 Mbps Speed Benchmark & Other Metrics

In past broadband progress reports, the FCC declined to establish a speed benchmark for mobile broadband services even though it consistently concluded that consumers have advanced telecommunications capability only to the extent that they have access to both fixed and mobile broadband service.

Consistent with its proposal to define availability of advanced telecommunications capability as access to either fixed or mobile services, the FCC is seeking “comment on whether a mobile speed benchmark of 10 Mbps/1 Mbps is appropriate for mobile broadband services.” The FCC suggests that LTE deployment could be used as a proxy for the proposed 10/1 speed benchmark. Comment is also requested on whether the FCC should incorporate other metrics such as latency, reliability of service, and monthly usage constraints. The FCC also asks what data sources that should guide the analysis of potential mobile broadband metrics and benchmarks.

Creating an Objective Section 706 Inquiry on U.S. Broadband Deployment

During his tenure as a Commissioner, Chairman Pai consistently complained that the annual broadband progress report was used by the FCC “to seize new, virtually limitless authority to regulate the broadband marketplace.” For instance, in 2015, the FCC raised the fixed speed benchmark from 4/1 to 25/3, making it easier for the FCC to conclude U.S. broadband deployment was insufficient. When the FCC determines that broadband is not being deployed in a reasonable and timely fashion, Section 706(b) requires the FCC to take immediate action to accelerate broadband deployment by removing barriers to infrastructure investment and promoting competition. With the first Notice of Inquiry into U.S. broadband deployment of his chairmanship, Pai wants to make it harder for the FCC to manipulate the Section 706 process.

In light of this, in the Notice of Inquiry, the FCC seeks comment on establishing a consistent, objective Section 706 framework using predictable, reliable, and regularly-released public data from sources on which the FCC can rely to evaluate broadband deployment benchmarks. To achieve this goal, the FCC is considering a wide range of issues, including those listed below:

The FCC asks whether it should continue to use FCC Form 477 deployment data in its 706 analysis; whether certain assumptions should be incorporated into Form 477 data; and whether other data should be considered.

The FCC seeks comment on the benefits or burdens of using the same inputs and methods year-after-year, and asks for suggestions on ways to introduce new data sources that may be relevant in the future.

For the fixed broadband speed benchmark, the FCC seeks comment on “whether there should be a relationship between the benchmark and what some fraction of subscribers are actually purchasing.” In other words, the FCC asks how it should consider the interplay between deployment of higher-speed broadband services and customer take rates? The FCC also asks whether it should account for consumer perceptions.

The FCC asks how it should interpret language in Section 706 stating that advanced telecommunications capability requires access to voice, data, graphics, and video telecommunications. Similarly, the FCC seeks comment on ways to incorporate the impact of industrial and technological change into its analysis.

The FCC asks for suggestions on specific steps it could take to make the Section 706 analysis clearer and more predictable to industry, consumers, and other interested parties.

The FCC seeks comment on how it can make its annual inquiry more rigorous.

How Should the FCC Measure Deployment

To measure annual broadband deployment, the FCC proposes to compare broadband deployment to census blocks in the present year to deployment to census blocks in previous years. The FCC intends to analyze fixed and mobile broadband separately, and then consider the totality of those results when making its final determination of whether advanced telecommunications capability is being deployed in a reasonable and timely manner. At the same time, the FCC proposes to measure whether advanced telecommunications capability is being deployed to all Americans, i.e., in all areas of the country, by examining all areas in the country, and comparing deployment across areas. The FCC seeks general comment on this proposal, and any alternatives, as well as suggestions on a specific method for assessing whether deployment is being carried out “in a reasonable and timely fashion.” The FCC also asks how it should compare urban areas with rural areas, and whether and how it should evaluate deployment based on certain demographic criteria.

How To Accelerate Advanced Telecommunications Deployment

When the FCC determines that broadband is not being deployed in a reasonable and timely fashion to all Americans, Section 706(b) directs the FCC to use “price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment” to encourage such deployment. [3] In response to recent negative findings, the FCC has taken numerous actions intended to facilitate broadband deployment, such as allocating Connect America Fund support, initiating proceedings to remove federal and state regulatory barriers to network infrastructure investment and deployment, and forming broadband deployment advisory groups. In the Notice of Inquiry, the FCC seeks comment on what actions, in addition to those already under way, might encourage more expansive and rapid deployment of networks that provide advanced telecommunications capability.

[1] Inquiry Concerning Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, GN Docket No. 17-199, Public Notice, FCC 17-109 (Aug. 8, 2017).

[2] 47 U.S.C. § 1302(b).

[3] 47 U.S.C. 1302(b).